Eaton Vance Chairman and CEO James Hawkes, 65, could have quite a stellar pre-retirement fiscal year in 2007, judging from the Boston-based fund company’s recent performance.
“Fiscal 2006 [ended Oct. 31, 2006] was another banner year for Eaton Vance,” says Hawkes, who will turn over the reigns to Tom Faust, 48, on Oct. 31, 2007. Total assets under management grew nearly 20 percent to close at $130 billion for the period. Gross sales and inflows were $27.1 billion vs. $25 billion in fiscal 2005, and open-end mutual fund net flows more than doubled.
In late November, the corporation staged an IPO for the common shares of the closed-end Eaton Vance Tax-Managed Diversified Equity Income Fund (ETY), producing gross proceeds of $2.6 billion. The fund’s IPO is the largest closed-end fund initial public offering ever, the company says.
And it’s not just the company’s closed-end funds that are catching investors’ attention. “We have a broadly diversified product line across equity categories and within them,” Hawkes explains. In the 10 weeks ended Oct. 27, Eaton Vance’s top selling funds were its national municipal fund (with annualized sales of $3 billion), large-cap value fund ($2.5 billion), floating rate fund ($1.8 billion), long-term state municipal fund ($1 billion) and tax managed dividend income fund ($0.9 billion).
“They’ve reached a certain critical mass,” shares Eric Jacobson, a research analyst with Morningstar. “They’ve gotten better at executing their business.”
Since 1996, the company’s total assets under management have grown at a compound annual rate of 22 percent. And, with nearly $80 billion in long-term fund AUM, Eaton Vance has moved up to being the 15th largest manager of long-term funds as of October 2006 from being the 25th largest in 2003.
“We also have good performance in a lot of different funds,” the CEO stresses. For instance, the Eaton Vance Greater India Fund (ETGIX) has five-star ratings from Morningstar in the past three, five and 10 years as of Sept. 30, 2006. It’s also in the top 1 percent in terms of its performance out of a pool of 85 funds and has five-year trailing returns of 37 percent. The fund’s advisor is Lord George Investment Management of Hong Kong.
The Eaton Vance AMT-Free Municipal Bond I (ETMBX) also has a five-star Morningstar rating overall. It’s five-year trailing returns are close to 7 percent and its estimated expenses are 0.87 percent, according to Morningstar. It rose 8.6 percent in the first 11 months of 2006.
The company’s funds are attracting more interest from financial advisors. In late May 2006, Merrill Lynch added the Eaton Vance Large-Cap Value Equity Strategy Fund to its financial consultants program. This program also includes the Parametric Portfolio Associates’ Tax Managed Core Portfolio and Eaton Vance/Parametric Tax Managed Consultants Diversified Portfolio; Eaton Vance acquired Seattle-based Parametric Portfolio Associates in 2003.
According to Eaton Vance, these offerings are part of Merrill’s separately managed account platform. The fund company also sells about 70 funds across other Merrill platforms, including 12 equity funds.